REPORT: JSW Steel in Negotiations to Buy London Mining
India’s third-largest steelmaker, JSW Steel Ltd, is reportedly in negotiations to acquire besieged iron ore producer, London Mining (LSE:LOND).
The UK-based company is struggling with declining iron ore prices, infrastructure woes and the ebola outbreak in Africa, where it operates a small mine. In addition, the company is riddled with debt, announcing last week it did not have enough cash to operate its only mine and was working to secure investors.
To make matters worse, London Mining was hit with an extra $2 a ton charge for docking their cargo ships in Sierra Leone, forcing the company to spend more on exporting its minerals.
Although a JSW spokesman could not comment, talks between the two groups have reportedly been going on for some time.
"Talks (with London Mining) have been going on for many months. JSW people have visited them also," said an unnamed source.
The debt-burdened miner is a prime candidate for a takeover; however, analysts and sources familiar with the situation believe JSW would still need to tackle many of the issues facing London Mining and its peers.
"Their operating cost is still too high against the current iron ore price. It's not a bad asset, but having so much debt when the iron ore price is so low, and when you're not generating free cash flow, just doesn't work," said analyst Carole Ferguson at SP Angel in London.
In addition to purchasing London Mining, the deal could potentially include African Minerals, a UK-based minerals exploration, development and mining company that owns a low-cost rail line and port in Sierra Leone.
News of the possible acquisition drove shares for London Mining up almost 18 percent on Monday.
Vale invests $150mn to extend life of Manitoba operations
Vale has announced a $150mn CAD investment to extend current mining activities in Thompson, Manitoba by 10 years while aggressive exploration drilling of known orebodies holds the promise of mining well past 2040.
Global energy transition is boosting the market for nickel
The Thompson Mine Expansion is a two-phase project. The announcement represents Phase 1 and includes critical infrastructure such as new ventilation raises and fans, increased backfill capacity and additional power distribution. The changes are forecast to improve current production by 30%.
“This is the largest single investment we have made in our Thompson operations in the past two decades,” said Mark Travers, Executive Vice-President for Base Metals with Vale. “It is significant news for our employees, for the Thompson community and for the Province of Manitoba.
“The global movement to electric vehicles, renewable energies and carbon reduction has shone a welcome spotlight on nickel – positioning the metal we mine as a key contributor to a greener future and boosting world demand. We are proud that Thompson can be part of that future and part of the low carbon solution.”
Vale continues drilling program at Manitoba
Coupled with today’s announcement, Vale is continuing an extensive drilling program to further define known orebodies and search for new mineralization.
“This $150mn investment is just one part of our ambitious Thompson turnaround story. It is an indicator of our confidence in a long future for the Thompson operations,” added Dino Otranto, Chief Operating Officer for Vale’s North Atlantic Base Metals operations.
“Active collaboration between our design team, technical services, USW Local 6166, and our entire Thompson workforce has delivered a safe, efficient and fit-for-purpose plan that will enable us to extract the Thompson nickel resources for many years to come.”
The Thompson orebody was first discovered in 1956 by Vale (then known as Inco) following the adoption of new exploration technology and the largest exploration program to-date in the company’s history. Mining of the Thompson orebody began in 1961.
“We see the lighting of a path forward to a sustainable and prosperous future for Vale Base Metals in Manitoba,” said Gary Annett, General Manager of Vale’s Manitoba Operations.